PayPal seeks license to launch mobile wallet in India

Global payments company PayPal is eyeing a prepaid payment instrument (PPI) licence to enter the competitive mobile wallet space in the country, said three sources familiar with the development.Mugdha Variyar | ET Bureau | April 27, 2017, 08:11 IST

Global payments company PayPal is eyeing a prepaid payment instrument (PPI) licence to enter the competitive mobile wallet space in the country, said three sources familiar with the development.

PayPal's move comes even as the company has been evaluating multiple investments and acquisitions of wallet players in the country.

While the Reserve Bank of India has placed a moratorium on considering fresh applications for PPIs since September till the time it lays down new guidelines, two industry sources said PayPal may have already applied for the licence.

However, it was not among the batch of companies who were recently given PPI licences, such as Amazon and Pine Labs, which received licences in March. One source said the global payments major had recently held discussions with industry bodies on its PPI application.“PayPal is interested in getting a wallet licence and has discussed this with some industry associations," the source cited above said.

PayPal said it does not comment on market speculations and rumours.Asked if RBI had received an application from PayPal for a PPI licence, the regulator said it “doesn't disclo se the status of an application received under the Payments and Settlement Systems Act."

The Nasdaq-listed company had recently held talks with current PPI holders such as payments company FreeCharge, as the latter's parent firm Snapdeal was looking to get it off its hands, but the talks reportedly fell through. The global player has also held talks with Flipkart's payment arm PhonePe for an investment, according to two sources directly involved in the discussion. PayPal's potential entry into the mobile wallet space will co me after Amazon's India unit recently received a PPI licen ce from the regula tor. Amazon India had applied for the li cence last March. There is still speculation about how these global companies look to play their wallet licences in the country.

One industry member said since PayPal is currently focused on international remittance, the wallet licence will help it increase its local presence in the country . PayPal India's head Anupam Pahuja, and head of engineering Guru Bhat had told ETtech in an interview in February that while PayPal has 192 million customers in more than 200 markets across the world, there is no domestic product in India.

Some industry players ET spoke to while reporting on Amazon getting a wallet licence had said they didn't expect the ecommerce company's wallet to be an independent player in the space, adding that it could be a hygiene process since other ecommerce companies such as Flipkart and Snapdeal have their own wallet services. A fintech investor who did not wish to be named said the main idea behind players like PayPal and Amazon getting a wallet would be to get customer retention through discounting and cashbacks.

“Wallets are not the best way to transact. But they are easy to implement and the biggest appeal is the opportunity to give cashbacks," an investor with a VC firm said.

Another question for players like PayPal looking to get a PPI licence is about how wallets will be impacted since RBI is in the process of laying down more stringent guidelines for PPI issuers, and many wallet players have raised concerns over some of these rules, especially around full KYC norms, which are expected to increase customer acquisition costs and impact the simplicity of the wallet.